A proposed model for how companies can make money with the Internet of things (IoT)

1. IMS Inc. Proprietary and Confidential
What’s the natural business model for the IoT?
September 25, 2015

2. IMS Inc. Proprietary and Confidential
Purpose
• This presentation
outlines the likely, core
business model(s) for
the Internet of things
• Business model of IMS
• Business model of our
customers
• Related business models
• Overall business model
for the IoT

3. IMS Inc. Proprietary and Confidential
Background
• Definition: a business model is the way a
company makes money

4. IMS Inc. Proprietary and Confidential
Scope of this business model

5. IMS Inc. Proprietary and Confidential
Business model derived from transportation
1.) Connected cars &
Transportation &
Auto insurance

6. IMS Inc. Proprietary and Confidential
Applicable to healthcare and life sciences
2.) Healthcare & Life Sciences 1.) Connected cars &
Transportation &
Auto insurance

7. IMS Inc. Proprietary and Confidential
Applicable to consumer & home
2.) Healthcare & Life Sciences
3.)Consumer & home
1.) Connected cars &
Transportation &
Auto insurance

8. IMS Inc. Proprietary and Confidential
Applicable to buildings
2.) Healthcare & Life Sciences
3.)Consumer & home
4.)Buildings
1.) Connected cars &
Transportation &
Auto insurance

9. IMS Inc. Proprietary and Confidential
Applicable to security & public safety
2.) Healthcare & Life Sciences
3.)Consumer & home
4.)Buildings
5.)Security &
public safety
1.) Connected cars &
Transportation &
Auto insurance

10. IMS Inc. Proprietary and Confidential
What’s the business model for IMS?
2a.1.
2b.
2c.3.
4.
5.
6. 7.

11. IMS Inc. Proprietary and Confidential
1.) What does IMS do related to the IoT?
Infotainment
Data analytics &
In vehicle services
Telematics
1.
2.
3.

12. IMS Inc. Proprietary and Confidential
Hardware
& Sensors
Connectivity
Data
Software
Processes
People
1a.) How does this relate to the IoT?
• IMS manages the hardware, connectivity, software
and data related to the “Internet of cars” i.e., end-to-end data
solution

13. IMS Inc. Proprietary and Confidential
1b.) Tracking health of our programs
•Our business centre help our customers track the health and progress of their programs

14. IMS Inc. Proprietary and Confidential
2.) Who does it help and how?
Auto
Insurance
firms
Fleets
& Individuals
Governments
a.)Who do we help?
b.)How do we reach them?
(Direct sales)
c.)How do we interact?
(Direct sales)

15. IMS Inc. Proprietary and Confidential
2a.) Insurance companies, fleets, individuals
Personal Lines UBI
Young Driver
Integrated Partner Analytics
Mobile

16. IMS Inc. Proprietary and Confidential
2b.) Telematics improves ability to price risk
Driver 1
Driver 2
35k
kms
10 events
41 events
7 events
13 events
0%
12k
kms
Traditional rating variables: Twin males, 30+, F150 truck, same
postal code, drive about 15k kilometers/year
4%
19%
5%
3x
5x
4x
2x
5x

17. IMS Inc. Proprietary and Confidential
2c.) Governments and individuals

18. IMS Inc. Proprietary and Confidential
2d.) Continuous risk assessment
New
insurance
model
Insurance
carrier
IoT Sensors
Continuous
communicat-
ions
Continuous risk
Re-assessments
Opportunities
for timely communications
with consumers and up-sell
-Insurance
-Warranty services
-Advertising
Implications for
- Business model
-Product
-Underwriting
-CRM

19. IMS Inc. Proprietary and Confidential
3. How do we do it?
• IMS provides an “end to
end” solutions for our
customers
• Logistics
• Program design
• Device selection
• Forward/reverse logistics
• Systems integration
• Analytics
• Data capture
• Analytics
• Insights, intelligence and
decision making
• Proprietary interfaces to
consume data

20. IMS Inc. Proprietary and Confidential
3b.) In-vehicle enablers
3.) “Plugged-in”
Technology
6.) “Beamed in”
Technology
(Over the air updates)
5.)“Hybrid”
Technology
2.)“Bolted-in”
Technology
1.) “Built-in”
Technology
4.) “Brought-in”
Technology

21. IMS Inc. Proprietary and Confidential
Data
Dashboards
Scoring Analytics
Journey Summaries
PND Device OBD-2 Device Hardwire Device Mobile Device
Applications
SEAMLESSINTEGRATION
Open Standard Vehicle Interface
ActiveData
Stores
Secure
Data
Warehouse
Data
Analytics
Context&
Location
Integration
Open Standard Export Interface
Mobile
Interfaces
Advanced Data Compression
Partner
Content
Integration
Web Interfaces
3rd Party
Systems
Vehicle Health &
Emissions
Event Alerts
ENDTOENDSECURITY
4. What do we need?
The IMS DriveSync Platform

22. IMS Inc. Proprietary and Confidential
5. Who helps IMS?
• Certified and qualified
hardware partners
• 3PLs in each country
• Data partners e.g.,
Google Maps, Weather,
Traffic, Posted speed
limits
• Wireless carriers –
Global SIMs
• Designers e.g., Akendi

23. IMS Inc. Proprietary and Confidential
6. IMS financials
How much will it cost?
- Human costs
- Set up at IMS
- Maintenance
- Customer care
- Cost of goods
- On-going 3rd party costs
- Licenses
- Wireless costs
How much will you make?
- Consulting revenue e.g.,
business models and
program set up
- Outsource PMPs
- Hardware revenue
- Recurring (monthly)
revenue

24. IMS Inc. Proprietary and Confidential
US barriers to growth
Making the
economics work
Customer
adoption
Management
support
Understanding the
data
43%
30%
15%
13%
Source: Survey of 400 Telematics Update contacts. August 2012.
6b.) Helping insurers overcome their barriers

25. IMS Inc. Proprietary and Confidential
Auto insurers business model for the IoT
Human resources costs
Telematics costs
- Devices &data
- Monthly fees
Revenue drivers
-Attract good drivers
-Retain good drivers
-Reduce claims costs
-Sell value added services

26. IMS Inc. Proprietary and Confidential
From auto insurance to other verticals
• Study Connected cars and UBI as a practical use case
• Expand use cases to other areas of insurance
Connected
ecosystem
Connected cars
Connected
commercial
buildings
Connected
homes
Connected
people
Usage based
Insurance (UBI)
Smart home
monitoring
Smart buildings Health monitoring
& fitness

27. IMS Inc. Proprietary and Confidential
Vehicle location can reduce property risk
• Auto telematics data can be used for home and life
insurance
• The entire business model can be used by other
forms of insurance
Connected
ecosystem
Connected cars
Connected
commercial
buildings
Connected
homes
Connected
people
Usage based
Insurance (UBI)
Smart home
monitoring
Smart buildings Health monitoring
& fitness
A car parked at a home can reduce
the risks related to the home
1.) Location data

28. IMS Inc. Proprietary and Confidential
Aggressiveness data can price life insurance
• Auto telematics data can be used for home and life
insurance
• The entire business model can be used by other
forms of insurance
Connected
ecosystem
Connected cars
Connected
commercial
buildings
Connected
homes
Connected
people
Usage based
Insurance (UBI)
Smart home
monitoring
Smart buildings Health monitoring
& fitness
Price life insurance2.) Speeding and
aggressiveness

29. IMS Inc. Proprietary and Confidential
Other business models are in play as well
1.) Auto
sales and
distribution
2.) Car
sharing
3.)
Telematics
4.) Collision
avoidance
5.) Auto-
nomous
vehicles
6.) Intell
-igent
Transport
How will
cars and
insurance
be sold in
the future?
How fast
will no. of
policies
decrease in
urban
markets?
How will
Telematics
transform
Pricing, CRM
Claims?
How will
liability shift
from drivers
To OEMs?
Will drivers
and vehicles
need separate
policies?
How will
this reduce
accidents
and claims?
• Connected car technology is transforming many areas
of insurance

30. IMS Inc. Proprietary and Confidential
Key lessons from IMS
Issue Implication/indicated action
Change is certain in
technology, competition and
regulation
Need to be flexible and
migrate one’s strategy over
time
IoT enablers will increasingly
be embedded with sensors
Need opportunities and often
lower costs
Connectivity methods and
pricing will decrease
Lower cost for data acquisition
and service deployment
Processes and applications will
improve
New opportunities and
challenges will continuously
emerge
Business models will change Evolution is mandatory

31. IMS Inc. Proprietary and Confidential
Extrapolation the learning
• So, what do the IMS
and auto insurance
business models mean
for the Internet of
things?

32. IMS Inc. Proprietary and Confidential
A natural business model for the IoT?
• “You know the way
advertising turned out
to be the native
business model for the
Internet? I think that
insurance is going to be
the native business
model for the Internet
of things.”
– Tim O’Reilly, May 2014

33. IMS Inc. Proprietary and Confidential
How the IoT ties in with the Internet?
Pre-digital
• People to
people
• Mass media
Internet of
content
• email
• Information
(e.g., Web
pages)
• Entertainme
nt (e.g.,
YouTube)
Internet of
services
• eCommerce
• Web 2.0
Internet of
People
• Social media
• SMS
Internet of
things
• M2M
• Telematics
• Smart home
monitoring
•The IoT is a natural progression of digital technology
Time

34. IMS Inc. Proprietary and Confidential
The Internet and advertisers
• Nothing is “free”
• Pay with attention
(ads)
• Pay with data
(advertisers)
• Pay with credit cards
Consumers
• Create ads
• Sponsored links
• Ad targeting
Advertisers
(Facilitators) • Search engine
use
• Social media
access and
content
generation
The Internet

35. IMS Inc. Proprietary and Confidential
The IoT and insurers
• Nothing is free
• Pay with data
(insurers)
• Pay with attention
(Ads in future)
• Pay with credit cards
(Parents for teens?)
Consumers
• Buy or encourage
consumers to buy
IoT devices
• Connected cars
• Home security
• Provide content
• Pay monthly costs
• Receive continuous
feedback
Insurers
(Facilitators)
• Access to IoT
hardware,
sensors,
connectivity and
software, data
The IoT

36. IMS Inc. Proprietary and Confidential
Continuous risk assessment
New
insurance
model
Insurance
carrier
IoT Sensors
Continuous
communicat-
ions
Continuous risk
Re-assessments
Opportunities
for timely communications
with consumers and up-sell
-Insurance
-Warranty services
-Advertising
Implications for
- Business model
-Product
-Underwriting
-CRM

37. IMS Inc. Proprietary and Confidential
IoT & Insurance start with high value assets

38. IMS Inc. Proprietary and Confidential
Questions?
Blair Currie bcurrie@intellimec.com
Tel 416 529 7776